Critical Review: Cheetah Mobile (CMCM) versus iDreamSky Technology (DSKY)

Cheetah Mobile (NYSE: CMCM) and iDreamSky Technology (NASDAQ:DSKY) are both technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, earnings, profitability, valuation and dividends.

Profitability

This table compares Cheetah Mobile and iDreamSky Technology’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cheetah Mobile 7.44% 10.76% 6.35%
iDreamSky Technology -1.50% -1.80% -1.34%

Earnings & Valuation

This table compares Cheetah Mobile and iDreamSky Technology’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cheetah Mobile $657.45 million 3.42 -$11.59 million $0.39 40.18
iDreamSky Technology N/A N/A N/A $0.18 77.39

iDreamSky Technology has lower revenue, but higher earnings than Cheetah Mobile. Cheetah Mobile is trading at a lower price-to-earnings ratio than iDreamSky Technology, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Cheetah Mobile and iDreamSky Technology, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cheetah Mobile 0 3 0 0 2.00
iDreamSky Technology 0 0 0 0 N/A

Cheetah Mobile presently has a consensus price target of $11.67, suggesting a potential downside of 25.55%. Given Cheetah Mobile’s higher probable upside, equities analysts clearly believe Cheetah Mobile is more favorable than iDreamSky Technology.

Institutional & Insider Ownership

7.2% of Cheetah Mobile shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Cheetah Mobile beats iDreamSky Technology on 7 of the 8 factors compared between the two stocks.

About Cheetah Mobile

Cheetah Mobile Inc. is a holding company. The Company and its consolidated subsidiaries, variable interest entities (VIEs) and a VIE’s subsidiary are engaged in the provision of online marketing services, Internet value-added services, and Internet security services and others. The Company operates a platform that offers mobile and personal computer (PC) applications for its users and global content promotional channels for its customers, both of which are powered by its cloud-based data analytics engines. For its users, its diversified suite of applications optimizes mobile and PC Internet system performance, and provides real time protection against known and unknown security threats. Its data analytics engines perform real time analysis of mobile applications, program files and Websites on their devices for behavior that may impair system performance or impose security risks.

About iDreamSky Technology

iDreamSky Technology Limited is a holding company. The Company, through its subsidiaries, and its variable interest entities (VIEs) is principally engaged in the licensing and operating of single player mobile games and mobile online games (the listing business) in the People’s Republic of China. The Company is an independent mobile game publishing platform in China. The Company also operates games as a service, where it offers live game services, engages in live user communications and gains user insights through its multi-dimensional data analysis engine to drive ongoing game optimization and monetization. The Company provides its users with live game services and connects them through friend lists, message boards, leaderboards and user tournaments, enabling in-game interaction and social networking. Its platform offers a range of services, including game redesign and porting, ongoing optimization, marketing, distribution, monetization, payment support and user-related services.

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